USDA to cut off farm subsidies to city slickers

The Agriculture Department is getting ready to tell a lot of people who’ve been getting farm subsidy checks without lifting a hay bale, swinging a pitch fork or driving a tractor that they’re cut off.

Congress could’ve answered the question of “who is a farmer?” and thus eligible to get payments when it passed the Farm Bill a year ago, but it punted the matter to the USDA.

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Wealthy executives, celebrities and others get subsidies even if they never set foot on a farm or don’t need the taxpayer-funded assistance. They include the likes of Microsoft co-founder Paul Allen and Commerce Secretary Penny Pritzker, according to an Environmental Working Group report.

USDA will soon issue its proposed rule for qualifying who is “actively engaged” in farming, making them eligible for some of the billions paid each year to farm families across the U.S. to support them in tough times when crop prices or farm revenues are low, Agriculture Secretary Tom Vilsack told POLITICO in an exclusive interview this week.

“The reality is that this has been a loophole that has been utilized by folks in [business] partnerships to allow for many, many, many people to qualify as actively engaged [in farming] when in fact they might only be engaged in a conference call or in a very narrow sense participating in decision-making in a farming operation,” Vilsack said. “We will close that loophole to the extent that we can.”

In 2013, the Government Accountability Office pointed to one common, troublesome practice: As much as $590 million was being paid in farm subsidies annually to so-called general partnerships, in which multiple individuals could claim to participate in the management of a single farm.

“I think you’ll probably see a lot of folks who in the past have been in an office in, say, a big city who had an interest in a farming operation for tax purposes who will not be getting the benefits that they got before,” Vilsack said.

Vilsack said that a year after the Farm Bill was passed, the USDA is about 80 percent done completing the 450 actions required by the legislation, which will cost taxpayers about a trillion dollars over 10 years. That includes creating new programs to help preserve U.S. dairy farmers in the event of a large drop in prices and livestock farmers in the event of a blizzard or other natural disaster.

But a few tasks remain for the department, including the need to define a farmer.

The uproar over who was getting paid farm subsidies grew louder in November 2013, when the Environmental Working Group issued a report identifying dozens of billionaires who collected millions of dollars in subsidies between 1995 and 2012, including Allen and Pritzker.

The GAO, in its report, described one particularly egregious example involving a partnership made up of 11 members, “several of whom appeared to have little involvement in farming operations, that received $1 million in farm program payments on its 11,900 cropland acres in 2001.”

Congress paid heed to the growing criticism and — in the months leading up to the ratification of the 2014 Farm Bill — Sen. Charles Grassley (R-Iowa), Rep. Jeff Fortenberry (R-Neb.) and other lawmakers sought to add a measure that would cap the number of people who could qualify for payments. They would have placed hard caps of $250,000 per year for a farmer and his or her spouse and $125,000 per year for only one “farm manager” on a single farm.

But the provision was ejected during last-minute wrangling between the lead Farm Bill negotiators.

It was a blown opportunity, said Craig Cox, EWG’s senior vice president for agriculture and natural resources.

“Congress missed a huge opportunity to finally put concrete criteria for deciding who is actively engaged in farming and instead kicked the can over to USDA,” Cox said.

Congress may have balked when it came to defining a farmer, but it did take a step toward reining in the wealthiest of farm owners from continuing to rake in the payments by prohibiting the payment of subsidies to anyone with an average adjusted gross income of more than $900,000 to get a subsidy payment.

The department instructed USDA only to not deny payments to “entities comprised solely of family members.”

Vilsack would not give an estimate on how much the USDA will save taxpayers by setting a new definition for farmers and said only “one to two percent” of farmers or fewer will likely be effected by the changes the department proposes.

“The vast, vast majority of farm families and farm corporations — they’re not going to be affected by what we propose because Congress has exempted them from our definition,” he said.

Anything USDA can do to reduce the cost of the 2014 Farm Bill could come in handy about now, as the legislation is proving more expensive than expected.

The Congressional Budget Office issued a revised forecast earlier this month suggested payouts from two of the Farm Bill’s programs — the Agriculture Risk Coverage and Price Loss Coverage — would run about $6.9 billion in 2016. That’s about $2 billion more than CBO predicted more than a year ago.